Brian Armstrong: Rebuilding Coinbase Around Intelligence

There's actually about four billion people in the world today who are unbrokered. Half the planet can't get access to any high-quality US companies to invest in. If you survey Americans, 83% of them say that the financial system is not currently working for them.

There's actually about 1,200 full-time agents working at Coinbase now, but in the future, you're increasingly going to talk to one agent. That agent is going to orchestrate hundreds of thousands of other agents. People are going to use things like Coinbase Adviser right in their Coinbase account to just manage their financial life. That's probably the coolest thing on the frontier that we're announcing today.

Thanks for having me.

Yeah, the Coinbase System Update. We do this twice a year where we go out and talk about everything we built in that half of the year and we've got some really exciting announcements. I can go through a couple of them if you want. One of the big ones is tokenized equities. That's something we've been working on for a long time. Just like stablecoins tokenized money, dollars, and democratized access for everybody, we're now doing that with stocks for the first time, which is really exciting. We built out a lot of infrastructure for AI agents to actually get their own financial accounts and connect them into your Coinbase account. And then we finally got the approvals in the US to unify our global liquidity. Most people don't know that 80% of the trading volume went offshore for crypto because of the lack of clarity in the US. We've just finally gotten some approvals where we can now get our international customers and our US customers on the same order book. And liquidity is a network effect, so that's really powerful.

Yeah. So, lots of people have been talking about this for a while and there are some products that are out there today, but they're actually not one-to-one backed by the stock itself. They are a derivative or a synthetic. So there are ways to get exposure, but you're not actually owning the underlying asset. And that's what was powerful about stablecoins, what caused them to take off so much. Once there was a trusted stablecoin like USDC where you could say, 'I know and believe that there is a dollar underlying every single one of these tokenized dollars,' then it really took off in a massive way. We saw with regulatory clarity like the Genius Act that now hundreds of large US companies are adopting it. And so we think that the same thing is on the cusp of happening now, especially with the market structure legislation or the Clarity Act. Coinbase is the most trusted brand in crypto. I think we're the ideal company to actually be that bridge where we have the underlying stocks, a one-to-one token minted on top of it. And the benefits are that people all over the world can trade it. There's actually about four billion people in the world today who are unbrokered. They don't have access to any high-quality US investments. They can trade. And then you can do 24/7 trading with tokenized stocks. So that's going to totally change the world on that dimension. And then lastly, one kind of cool feature is that you can just really easily send these stocks just like any other token. So you can gift it to your friends, give people a share of Coinbase or Nvidia at your nephew's birthday party. It brings stocks onto modern financial rails and it's going to be really cool.

Yeah. So, we knew that AI tools need to be embedded right in the Coinbase app because people are asking their AI a lot of investment and financial questions right now, but the AI agent doesn't really have context about what's in your account and what your financial goals are. It can't actually take actions on your behalf. So, we launched Coinbase Adviser. It's built right into the Coinbase app and you can talk to it in plain English. It can do research, but it can also conduct trades, do tax loss harvesting strategies, financial literacy or education. Most people on the internet, when they write something on X, they say 'this is not investment advice.' We thought, we're the most trusted brand in crypto. Why don't we build this the right way and actually make it real investment advice? The advice you're getting now from it is investment advice. We can actually say that.

Well, right now we are collecting all of that data. One of the things that I'm excited to do over time is actually build a frontier model for investing. A lot of the scaling laws apply anytime you're building one of these AI models, and we're starting to collect a lot of that data now. Today the human's in the loop on these investment recommendations. It can research things, propose things that you might want to do, but the human is hitting accept and deciding what to do. Then we can start to build that data set over time, which I think will be a real moat.

Well, the mission of the company is to increase economic freedom in the world. We believe that it's important for everybody to have access to good financial services, to have sovereignty of money, to have sound money that can't be eroded via inflation, for people to raise money to start a company or to get a loan or to make payments all over the world. We want to democratize access, bring down the fees, reduce the friction, and that's how we're going to unlock a lot of prosperity in the economy and for civilizational progress. There's a lot of good research out there on economic freedom and the different countries of the world. The highest economic freedom countries, it's positively correlated with higher GDP per capita, higher happiness, better treatment of the environment. The poorest 10% of people in those societies are much better off. And it's actually correlated with reduced corruption, reduced war, reduced infant mortality. We believe that economic freedom is a foundational necessity for all civilizational progress. And crypto is this unique technology which can actually update lots of financial services and create more economic freedom in the world.

I think in the US it's a tale of two cities. On the one hand, the US is one of the more economically free countries in the world. People generally trust the dollar. They trust that the government's not going to just come take money out of their bank account without their permission. Part of what gave me the appreciation for this when I was first starting Coinbase is that I had actually spent a year living in Argentina, and I saw that country go through hyperinflation. It was basically a hundred-year history of the government kind of stealing wealth from people in various ways. If you've only spent time in the US, there's many countries in the world where we take these things for granted in the US that is not the normal state of the world for most people. But even in the United States, our financial system needs a massive update. If you survey Americans, something like 83% of them say that the financial system is not currently working for them. They say the fees are too high, there's delays, it's hard to move money, there's unequal access. There's lots of people in the US who are unbanked or underbanked. Even in the US, our legacy financial system is slow, creaky, old. In many cases it's built on code that was written in the '90s in COBOL on mainframe computers. There's some people in the world who have a hair-on-fire problem that their money could just be taken from them at any moment. And now suddenly with a smartphone they can have access to good financial services. Also in the US we're going to see this unlock growth and prosperity.

He grew up in a socialist country. The people who grew up in socialist countries and immigrated are sometimes the most patriotic. Surprise.

Yeah. So, I'm definitely a student and fan of free market capitalism. We believe that capitalism is a force for good in the world. To me that's a fairly obvious thing. Probably amongst the general population or college campuses, maybe that's a controversial view in this moment, but we're unapologetic about it. We believe capitalism is a good thing and we want everybody to have a piece of it. Capitalism lifts everybody up. It doesn't create equal outcomes. I actually don't think you want that. You want high growth that lifts everyone up. We very much believe that crypto is free market oriented which can enable all these things, and we want to democratize access for everyone to participate in capitalism. Some of the influences when I was founding Coinbase, I had been reading a lot of Milton Friedman. There's this great TV series from the '80s called Free to Choose where he goes through a bunch of interesting economics examples. I'd been reading some Ayn Rand and things like that, celebrating builders and people who can move civilization forward. America is one of the more free market capitalist countries in the world. It's not the most. I think it's in the top 11 or 12. You can actually go look at the rankings. There's various organizations that publish rankings of the economic freedom of the world. The US is the most free large economy, much more free than say China. But there are maybe a handful of countries above that have even a little more economic freedom. In my view, the more you lean into economic freedom, the more everyone benefits, and America should do that as well.

I think that every generation has to kind of learn this from first principles if they haven't been exposed to it. When I talk to people who left socialist countries, for them it's the most obvious thing in the world because they actually lived through it. If you look at some of the lower economic freedom countries, North Korea, Cuba, formerly Venezuela, these are not places where you would want to go. People in general are much worse off and they have worse outcomes across the board, whether you look at healthcare, education, GDP per capita, or anything. Look, it's a nuanced debate. There's a whole argument about suicidal empathy, of if America has been so prosperous for so long, does it create some sense of guilt and people now want to give back or redistribute. It's an interesting complex societal phenomenon. Free market capitalism is kind of this contrarian idea. On the face you'd say unequal outcomes, that's not good. But it's the least bad outcome. If you take away that incentive and freedom for people to go build innovative things and try new ideas, you have a society that stagnates and you have people who go into positions of power that become corrupted. You need a free market to root out bad ideas and celebrate good ideas for everyone to benefit.

Well, Coinbase is expanding to different countries all over the world. The Base app, which is our self-custodial wallet, has an easier time spreading. You can launch that in hundreds of countries around the world because if you're not taking possession of customer funds, it's not treated as a regulated financial service business. So Base is our way to get to all these countries, and then we have 10 markets or so where we go really deep with our custodial regulated financial service business. Some interesting stories from Argentina. I remember people would try to ride the bus and the buses would only take coins. Because there was so much hyperinflation, you'd have to come with a fistful of coins. Coins became almost rare. If you went to go spend with paper money and they owed you coins and change, they'd say, 'I'll just give you an extra peso back' because they didn't want to give up their coins. The more pernicious example is that in Argentine culture, people were quite pessimistic about the future. Peter Thiel had this great 2x2 diagram about whether you're optimistic or pessimistic, deterministic or non-deterministic about the future. People in Argentina kind of feel like it could all be gone tomorrow. The future is going to be worse. So just live every day like it's your last. Have great food and wine. Spend your whole paycheck, have a nice dinner with your family. Because that's been the history of the country, periodically their money gets eroded and taken away. The consequence is everybody in society doesn't plan long-term to try to build something for the future because it could all be gone tomorrow. To do a 10, 20-year exercise to go build a world-changing company like Coinbase or what Elon did with SpaceX, that's just not going to happen in Argentina because maybe the next election the government will just seize all of your assets. High inflation actually really harms the poorest people in society the most, because they're the ones who are holding all their wealth in cash. The wealthiest people in Argentina can get a brokerage account open in the US and hold real estate or Bitcoin, these inflation-resistant assets. It really changes the entire fabric of society to have high inflation and low economic freedom in a negative way.

Yeah. Those are great examples of just how crypto is updating the financial system. I mentioned one earlier, which is now anybody can get an account on a smartphone with an internet connection, especially if it's a self-custodial wallet, and do it anywhere in the world. Anybody with a smartphone and internet can store their wealth in a way that it can't be taken away from them. That's basic property rights in economics. That's something most people in the world don't have. We take it for granted here in the US. The second one is payments. With crypto rails, you can now send money instantly, less than a second, anywhere in the world for less than a cent. You can do that on the Base network with USDC, for instance. That's democratizing payments and bringing down the friction in the economy for all transactions of value. And then we're getting tokenization of all these asset classes, stocks and bonds and real estate. That makes it easier for everybody around the world to participate. Crypto is updating every aspect of the financial system. The Clarity Act would be another landmark piece of legislation that I think is a massive TAM expansion opportunity for Coinbase and for all of crypto to have more of this built in the United States with clear rules.

Yeah. The everything exchange is a great concept. It's how do we get every asset class in the world tradable in one account? The benefit to the customer is better capital efficiency. Because if your assets are all in one place, you can get better margin, more credit. And then you can trade these things 24/7 if they're really running on crypto rails. It really updates the trading infrastructure for everyone. In terms of Coinbase's unique advantage, we're storing more crypto than any other company in the world. I'd say we're the most crypto native, and that's what's allowed us to build a lot of these things on chain and come to market first. And then I think we have really the most trusted brand. That's what people are coming to us so far for.

At the very beginnings of Coinbase back in 2012, I made a couple of decisions which I think were quite formative. Number one, I'm going to try to build this company in the US instead of going offshore, even though that was harder because you had the lack of regulatory clarity. Number two, I'm going to put my name on it publicly and tell people who I am and what I'm doing. I was not pseudonymous. And then number three, we went and actively sought out licenses. In many cases, the regulators didn't know anything about crypto at the beginning. We had to act as an educational resource for them. We sometimes sought out licenses before they were even required just to demonstrate good faith and help bring the industry along. And then we ultimately became a public company in the United States, and that comes with a large number of controls and financial audits. You're correct that unfortunately we have seen some bad actors in crypto. You see bad actors in the traditional financial system too, the Bernie Madoffs of the world, the Enrons. I think we've really helped legitimize the industry, and that's contributed to our most trusted brand. Trust can come from lots of places. It can come from great design, great customer support, basically doing what you say you're going to do. My hope is that as we continue to go along for many decades and create a sense of stability, we will help level up the crypto industry. In five or ten years, people are going to be using financial services, a lot of it running on crypto rails. They won't even really know or care about crypto itself. They just want the cheapest way to send money abroad to their family or trade an asset class 24/7 and sign up on their phone in a few seconds. It's just going to be the easiest and cheapest way to get done whatever they want to do.

Yeah. The good thing about being in this industry, it's very innovative. Every few months or year, there's some new trend. You mentioned a couple of them. We're in a cycle right now where prediction markets are really trending, stablecoin payments are really trending, derivatives are trading trending. Sometimes people say, 'Oh, the price of Bitcoin's down, so crypto's down.' And I have to remind people that crypto is much broader than just Bitcoin now. When stablecoins and derivatives and prediction markets are all trending up, Bitcoin might be down. There's always going to be something that's up and something that's down. That's the nature of financial markets. What we've tried to do at Coinbase is diversify our suite of products to include everything. Just recently, we've been seeing some of the largest IPOs in history start to come to market. The AI companies have really eaten up a lot of the risk capital in the world. That actually might be part of the reason why Bitcoin is down, because people are just trying to get as much of their risk capital into these AI companies right now. From a Coinbase point of view, great. If that's what people want to trade, we have pre-IPO shares. You can get exposure to these things before they go live. And then once they're live and trading, we're going to have tokenized equities and traditional equities. Long term, I'm still super bullish on Bitcoin. I'm hoping we hit the bottom at 60K or so and it seems to be trending back up now. As some of these AI companies go public, the risk capital will start to shift around a bit more, and the market structure legislation might help as well.

Yeah. We launched with SpaceX a few weeks ago before they went public and we saw quite a lot of volume on there. To your point about democratizing access, this is a very important point. Retail really didn't get access to a lot of these private companies as they were going up in value. I think we can change that with things like pre-IPO shares. I think the accredited investor laws really need to get updated in this country. For people who don't know what that is, to trade in or invest in private companies, you have to become an accredited investor, which basically means you have a certain net worth or income that's quite high. The intention behind this was quite good. They're essentially trying to protect people from high-risk investments or scams. But you have to judge these policies not by their intention but by the results. And the results have been quite bad. Essentially, it makes it so only rich people can get richer. It's the most regressive tax. Typically, we want to have a progressive tax system where rich people pay more. In this case, it totally benefits rich people who can make more money in the private markets. And once something is valued at a trillion, then only then can retail trade it. It's completely unfair. The better way to do it would be a financial literacy test. It doesn't matter if you're rich or you're poor. If there's a concern about scams, pass a financial literacy test and then you could trade in the private market. That's the kind of thing that maybe once market structure is done, I'll get a chance to go talk with the Senate about.

Yeah. I think honestly there'd be support on both sides of the aisle for that. It would just be good for Americans.

Yeah, well, you're right. I think lots of people now are starting to integrate crypto trading, for instance. It's actually, you know, even though this idea is something a lot of people are talking about, the execution on it is really not there from almost anybody. I think we're actually leading now on this, where you can get access to millions of crypto assets, including DEX trading support that we added. You can trade every stock out there in the world pretty much pre-IPO, you can trade commodities, you can do prediction markets. So I would say like this, even getting these approvals in the US, we were the first for these perpetual-style futures and things like that for crypto and options trading. We're the first company to do that. I don't think any other company in the US has gotten that yet. So there's a number of things where we've been first, and doing it all in one product with high trust, where we're storing more crypto than any other company in the world, and we have this kind of deep crypto-native expertise. Those are our strengths. Lots of people are going to try this. Our job is just to be out there in the front.

Yeah. Well, it's interesting when I talk to our board members or even interns that have come into Coinbase, they all tell me this is one of the top few AI-enabled companies in the world. Like all companies right now are trying to figure out how to leverage AI, and I think Coinbase is really on the frontier of this. So we've done that in a couple of different ways. One is we're using it to improve both the quantity and quality of code that we ship. The amount of code being shipped per developer is up about 2x year-over-year. But believe it or not, if the average developer is shipping maybe like eight pull requests a week, the top few engineers are doing like 100 pull requests a week. So there's actually like a true outlier effect of these super builders that have become super AI-enabled, and we're essentially taking those folks and using them to train the rest of the engineering team just to keep driving that number up. And then, yeah, another thing we've been doing is we've actually been changing the traditional team size. Traditionally in tech companies, you'd have like a pod of 10, right? There'd be like one product manager, one designer, eight engineers, something like that. And we're now seeing these teams that are like two to four people. In some cases, we're seeing a one-person team.

Yeah. Because they're using 10 AI agents along with the one human. And so on many of these teams, we now have AI agents as collaborators in the Slack channel. You can talk to them. They're creating pull requests. They're creating new designs. And there's actually about 1,200 full-time agents working at Coinbase now. We try to basically estimate it because you can spin up an agent for five minutes and shut it down. But if you look at how much time AI agents are working compared to like a typical 40 to 60 hour work week, yeah, it's about 1,200 full-time agents now work at Coinbase. And that's what's allowing us to get this productivity with higher quality, I should mention. We're actually seeing like the rate of bugs and incidents go down per line of code shipped. So it's driving up quality while driving up the quantity as well.

Yeah. So I think the average team size will be smaller but that just means companies can do more things. And so I don't actually, I'm in the camp of people who don't think AI is going to actually like cause high unemployment. I think that employment will be about the same. I think that work will be optional in some sense in the longer term. That doesn't mean I think most people will actually choose to not work on something. It just might feel a little bit different. Like right now you're a podcaster and I'm a CEO going and talking to people on stage. Like 100 years ago this would not have been considered real work. Real work is like digging a ditch in a field with most of the people in the US economy working in agriculture with very manual labor like 100 years ago, and we don't have to do that anymore. So this is what we call work. I think that in the future people are going to still going to work on all kinds of things, but it may not be what we would consider work in some of like so AI is going to eliminate tasks and toil. It's not going to eliminate jobs in my view. And by the way, you reminded me of something else on your prior question about how we're shaping Coinbase. One of the next big things we're reaching for to get in place is recursive self-improvement. So we're actually using our apps to collect feedback from customers, whether that's bugs they're encountering, or even new feature requests. And we're using AI to aggregate all of this input from customers. And then the next set of agents actually take those priorities. They go plan it out. They draft the code and the pull requests. And then a human being can literally just sit there every day and say, 'Okay, here's like the hundred things that we heard from customers. AI went and implemented them. You can do a code review. You can say approve, approve, approve, approve.' And one person is just reviewing a hundred improvements that went out and the next day the AI collects another set of 10,000 pieces of input from customers. So the closer we can get to this recursive self-improvement loop, I think we're going to see really dramatic gains.

Oh yeah. I mean AI is making everything exciting right now. I think we're living in a golden age and the really exciting thing is we get to go build the financial infrastructure for this agentic economy. Most people today think of AI as like, oh I just talk to one agent at a time and maybe I ask it a question about my investment account or something. But in the future you're increasingly going to talk to one agent. That agent is going to orchestrate hundreds or thousands of other agents that's going to pay for goods and services with companies that it needs to engage with to get work done on your behalf. And so we need a new financial infrastructure for that that can do very small amounts, very frequent amounts, where every AI agent can actually have its own financial account that doesn't have to go through a typical, you know, AI agents don't have like a piece of government-issued paper with their identity and they can't fill out a CAPTCHA and all these things. So they're going to need a new way to pay and have a financial account, and that's what we've built at Coinbase.

Yeah. Well, I mean, I have started writing some code again using AI agents. I test out the tools every few months, make sure I can ship a few pull requests and still get in the weeds. But the other thing that I'm doing is I'm really just taking, we have some of the best tech talent in the world and I just go around and talk to all different teams. Some of them are creating a brain for their team where all the context of that team is getting updated continuously. So every time like a new lesson appears whether from an A/B test or customer feedback or an incident happens or anything like that, it's like the collective knowledge of that team just keeps getting updated in the brain of that team right in GitHub. Usually these are in markdown files. And we're going to start to do that on more and more teams and eventually you're going to have it be the intelligence of the whole company coming together like the aggregate of all of these different team pieces of knowledge. And that's what allows the AI agents to get smarter when they go build the next feature. And you have to, it's like a shift in mindset where let's say that it creates a draft pull request for some new feature and it's not quite perfect. Your instinct typically would be to go in there and actually edit the pull request to make it better. But what you want to do is actually update the brain that generated it and say, 'Now okay, when you make one of these, do it in this slightly different way, don't forget about this, this is important.' And have it rerun it itself and generate a brand new one. And only when it one-shots it perfectly, then do you ship it, because now you've encoded the thing that it missed in the brain for all future teammates and all future pull requests. And so it's a slight shift in how teams need to think about building the recursive self-improvement of that brain over time and not just editing the work of the AI itself.

Well, Emily Choi, yeah, she's the president and COO at Coinbase for anybody who doesn't know. And I'd say she and I are a really great complement because a lot of value gets created in companies, I think, when you have founder energy and a really strong operator. If you have only founder energy, sometimes it's a little erratic and things go wrong. If you have only operators, I think you can have a very well-run company, but it might be more incremental or not have as much innovation. And Emily and I can honestly, we can each do both, but we like to play to our strengths. And so yeah, we really had kind of like a second founding moment with Coinbase, because Coinbase got co-founded with Fred Ehrsam, who's still on the board and he's like hugely responsible for the early success of Coinbase, and we had a second founding moment, I think, with Emily, and that's what's allowed Coinbase to generate a ton of value. She's also just like a talent magnet. I mean, she's really great at just recruiting the best people in the world to all kinds of different functions we have.

She is.

Yeah, I think she's the best operator in the industry.

One thing I kind of learned over time was like don't apologize for what you're doing, right? It's like have an opinion about the world, how you're improving it, and what you want to see the future. And there's going to be lots of people out there with their own agendas. They're going to try to build their own status by trying to tear you down. I think the AI companies, they've been a little bit like first there's too much fear-mongering, right? Like this is going to take everyone's jobs and you should come regulate us and I don't think that's helpful or necessary. And then I think that, you know, if I were in their shoes, I would just be a little bit more unapologetic about it. I'd be like, look, we're building this because we think it's going to be an incredible benefit to humanity and everyone can have their own AI tutor. Like you can have a good mentor, you can have a therapist, you can have a better doctor. And it's for anybody sitting there saying that, 'Well, you know, I already have a great doctor, I would never use an AI.' It's like, well, you're sitting there from a position of privilege. Like many people in the world don't have the access to the best doctors of the world and these AI agents are going to create a world of abundance and so we're going forward and if you don't like the product you don't have to use it, right? It's literally that simple. So that's the approach that I would probably take and I think at Coinbase there's many times where we had to really stand up for our values even when it was unpopular and there was, you know, maybe there was some bad actor in crypto or maybe the SEC was trying to kill the industry in the US and we had to sue them and actually we won that case. Or the mission-first blog post, or even with the Clarity Act that's going through Congress now. We see like the bank lobby trying to push back against that and say, 'Oh, it's so dangerous,' and they have a conflict of interest because they're trying to protect their own business model. So we're always going to stand up for what we believe is right. It doesn't mean you're not open to feedback. If there's people who have your best interest at heart, I think you should be listening to that. But if there's people out there who just have their own agenda and they're trying to, don't do any virtue signaling. Don't just try to optimize for optics of like how do we look good to the world. People can see through that and it actually backfires. I think you should just have an opinion, stand for it, and don't apologize.

Yeah. Well, this was after we put out the mission-first blog post where we said we're going to focus on work at work and if you want to do political activism stuff not related to the mission, that's fine but just don't do it at work. You can do it outside of work. And yeah, I mean the, sorry, the New York Times at this point it was just I guess that was just against their worldview. And so people told me later what happened internally is they said basically they put a team together to go write negative articles about Coinbase. So they had the headline written before they'd even asked anybody what the news was because in my view the New York Times is more of like a political propaganda arm than it is doing any real journalism at this point. So that was frustrating at the time. I was like, 'Oh man, these negative articles are coming out.' But very quickly I realized, it just didn't matter. First of all, most of our customers don't read the New York Times or any traditional media to be honest. Or if they do, it's very rare. Like I'd say people under 50 years old are mostly doing new media now, which would be like podcasts like this. They're reading blog posts and Substack. They're looking at X feeds. And so I think all companies should really own their own distribution and just publish directly and talk to new media. That's what I do with 80% of my time. 20% of my time I still spend with traditional media because there are people who are over 50 or over 60 mostly on the East Coast who still read traditional media. And so from like, if I want to influence policy makers in DC, I'll probably go talk to Politico or something. But for most of our customers, the traditional media, it's dead. It's just not relevant anymore. And it took getting a negative article or two, which was scary at first, to realize it just didn't matter. And it freed me up to think about, okay, what do I actually want to create in the world if I don't have to worry about being attacked. And then I think I got more creative and more confident.

Well, I don't think OpenAI and Anthropic are going to build all the companies. I think they're mostly focused on building foundational models which are broadly applicable. But for instance, I don't think anyone thinks they're going to get into regulated financial services. It's a very complex and difficult thing. Most tech companies don't want to have anything to do with that. And then I think there's actually going to be specialized models. Like actually I think Coinbase has a real opportunity to go build a frontier model for investing, for instance, based on the data sets that we have from our customers. So yeah, I'm not worried about them eating lots of different companies. I think the best companies are just going to get even more efficient, like Coinbase is doing. And if there's companies that fail to integrate AI, then they could get left behind. But the best companies in every industry are just going to be even more productive.

It depends on what category because Coinbase does a handful of things. If you look at stablecoins, like we've partnered with Circle and USDC, the biggest competitor to that would be Tether, which is offshore. On the exchange side, on the crypto exchange side, our biggest competitor is probably Binance, which again is offshore. If you look at the US market where some of these fintech apps are integrating more crypto, and we offer stock trading now, so Robinhood would probably be, for our retail apps specifically, Robinhood is probably the most clear comp. And then with Coinbase developer platform, which is allowing all these businesses to integrate stablecoins, Stripe is probably the best competitor we have there. So yeah, we also run the largest institutional business in crypto. I actually don't think there's a close competitor for that, at least not one that comes to mind. So yeah, we have a number of different products and competitors in each of those categories. Oh, by the way, one other maybe interesting take on the AI usage. You're asking about Anthropic and all that.

So, one interesting phenomenon, like a lot of companies, we were seeing our AI spend go up like exponentially. And I went with the team and I kind of looked at this and I said the open source models are about three to six months behind the frontier models, but they're 99% cheaper for inference. And I was like, what percent of our prompts are we routing to open source models? Because if you're asking a really complicated question, you might want to use the frontier model. But if you're just asking like, who's Molly's manager, you know, or whatever, you're trying to look up something, why are you using the most expensive model? So, we actually made some very simple changes, like some more intelligent routing of prompts depending on the complexity of the query to the right model. We started caching some requests, just some sensible defaults. We even like when certain employees were about to hit their budget threshold, we would just say are you aware this is about to happen and you can keep going if you're doing something useful. We don't want to slow you down. But just even making them aware of that and what was really cool is we are now seeing our usage of AI tokens is still continuing to grow exponentially, but the cost curve has really started to flatten.

Yeah. I think that this is something that a lot of companies are going to do next. And we're getting this like intelligent middleware to know where to route the query to the right level of model.

There's an open source project that we based it on and then we modified it. I think the open source project was called LiteLLM, is one of the ones we used. There's some other in-house stuff that we used as well.

Yeah. So my guess is that within 12 to 18 months 80% of our workloads will be going toward models that are 99% cheaper but 20% of it will still go to these frontier models where you need to be IQ maxing or whatever you want to call it.

In terms of the amount of, sometimes I can never tell which ones people are going to get excited about because there's some that I've spent years trying to get over the line and I'm like, yes, finally we did it, like the tokenized stock thing and these approvals that we just got in the US to finally have global unified liquidity of our crypto trading and options, because 80% of the market had moved offshore, 20% was in the US, we finally got the approvals to have the same products in the US that were offshore. So we can now have global unified liquidity which has a cool network effect. But I think maybe the one I'm most excited about is just the financial infrastructure for AI. People are going to use things like Coinbase Adviser in their Coinbase account to just manage their financial life. It'll prompt you with things you didn't even think of that you could be doing better. It's going to quickly start getting to a place where you can actually have agents just trading autonomously in a certain portfolio where you put a certain amount of money, like tradingarena.xyz is a really cool app that people are using our API to go do this today. And then we're also going to see AI agents have their own financial accounts and we're powering that with the Base MCP API so they can have their own self-custodial wallet now and start to have a true agentic economy paying for goods and services, hiring other agents into teams. That's probably the coolest thing on the frontier that we're announcing today.

Yeah, I mean there's a lot of wealth being created right now. So of course we support stock trading. If they have shares and they want to move it over, we have a really great feature now where people can transfer stocks into Coinbase. It uses something underneath called ACATS, which is just the industry standard, but you can basically move it over from any brokerage and have it in the everything exchange where you can do anything with it. And then we also launched a direct deposit feature, too. So when you're at a company getting your paycheck, instead of depositing it into your checking account and earning zero, you might as well deposit it into Coinbase and earn 3.5% on cash. And then you can also when it's direct deposited choose to allocate it to different investment strategies if you want to have a portion of your paycheck working for you. So yeah, we're really, it's not just about trading, we're trying to be the primary financial account for someone's entire life.

Well, I do believe in that idea that you're the average of your five closest friends. And if you're unhappy with where you are, maybe level up your friends or something like that. Well, there's lots of people who I've learned from and I try to, whenever I'm trying to do something new for the first time, I try to just steal the best ideas from people who are really good at that, right? So there's people on our board that have helped me lots with comms and like how to go do policy in DC. There's other CEOs that I spend time with where we all learn from each other about how to build more AI-native companies. Like I think when I was first starting Coinbase, really I had never managed anybody. I was kind of a software engineer. I was kind of conflict-averse. I was kind of introverted. And so I really had to lean into this idea of I actually love conflict, like healthy conflict can create really good outcomes and that's kind of your job as a CEO sometimes is to take the most broken, messed up thing in the company. Maybe two people can't work with each other. Maybe someone's not ready to do this next job. Maybe you have to fire a customer because it's not, you know, and you basically just go do hard conversations for a living, right? And you have to find a way to like that and enjoy it because you're creating value and helping move things forward. And then pick your head up at the end of the week and realize not everything in the company is that broken. That was like the 5% that you were fixing. The other 95% is going really well. So anyway, there's lots of people like this who I've learned from. I'm not sure I want to give you all the exact names because...

I mean I can tell you people on our board for instance. Yeah, I mean I think Marc Andreessen has been an incredible mentor about how to do policy in DC and comms. I think Tobias Lütke, Shopify CEO, he's been great thinking about like how to be an AI-native organization. And there's probably like five or six other CEOs of other companies that I spend a lot of time with who I don't know if they want to be named so I'll decline that. But yeah, we compare notes. And it's good to have, I think when you're attempting to do anything, you should have a bit of a mastermind group like that. And for me, I was never like, I'm so busy, I don't naturally just keep in touch with people. I sort of have to structure it. So I'm like, 'All right, once a month we're going to have this meeting and once a year we're going to go on a trip.' And that allows us to get enough face time to build these strong relationships over time.

Thank you.